UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 13-1369

VCA CENVET, INCORPORATED, now known as Antech Diagnostics 

Incorporated,

Plaintiff – Appellant,

v.

CHADWELL ANIMAL HOSPITAL, LLC,

Defendant – Appellee.

Appeal from the United States District Court for the District of 

Maryland, at Baltimore. James K. Bredar, District Judge. 

(1:11-cv-01763-JKB)

Argued: December 10, 2013 Decided: January 16, 2014

Before NIEMEYER, SHEDD, and KEENAN, Circuit Judges.

Affirmed in part, reversed in part, and remanded by unpublished 

opinion. Judge Shedd wrote the opinion, in which Judge Niemeyer 

and Judge Keenan joined.

ARGUED: Brian E. Casey, BARNES & THORNBURG, LLP, South Bend, 

Indiana, for Appellant. Meighan Griffin Burton, WRIGHT, 

CONSTABLE & SKEEN, LLP, Baltimore, Maryland, for Appellee. ON 

BRIEF: David R. Pruitt, BARNES & THORNBURG LLP, South Bend, 

Indiana; Patrick R. Buckler, SPENCE & BUCKLER, P.C., Towson, 

Maryland, for Appellant. Michael Gordon, WRIGHT, CONSTABLE & 

SKEEN, LLP, Baltimore, Maryland, for Appellee.
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Unpublished opinions are not binding precedent in this circuit.
3

SHEDD, Circuit Judge:

I.

In December 2009, VCA Cenvet, Inc. (now known as “Antech 

Diagnostics, Inc.”), a California corporation that provides 

commercial laboratory services, entered into a Lab Services 

Agreement (“LSA”) with Chadwell Animal Hospital, LLC, a 

veterinary hospital in Abingdon, Maryland.1 Under the LSA, 

Chadwell agreed to purchase lab services exclusively from Antech 

for four years in exchange for discounted prices and rebates.

Antech agreed that if Chadwell used its services exclusively and 

purchased at least $78,000 worth of services per year (or $6,500 

per month), Antech would issue Chadwell a “loyalty rebate” equal 

to 17% of its purchases each month.

In October 2010, Chadwell learned that VCA Cenvet was a 

subsidiary of the corporation VCA Antech. Chadwell’s principals, 

Drs. Keith Gold and Ruby Schaupp, did not approve of Antech’s 

business philosophy and decided they would no longer use 

Antech’s services. Chadwell then entered into a lab services 

contract with another provider.

Antech filed this lawsuit in the United States District 

Court for the District of Maryland, alleging that Chadwell 

breached the LSA’s exclusivity provision. Antech sought damages 

 1 By its terms, the LSA is governed by California law.
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equal to its expected gross revenue for the remainder of the 

LSA’s term, plus the rebates and discounts it had already given 

Chadwell, totaling $273,000. In the alternative, Antech alleged 

that Chadwell had been unjustly enriched by the receipt of 

discounted rates premised on the completion of the LSA’s fouryear term. Antech sought restitution of the rebates and 

discounts Chadwell received prior to the breach, totaling 

$44,844. Chadwell conceded that it breached the LSA but argued 

that the terms of the contract limited Antech’s recovery to 

$16,096.66, the amount of the rebates.

The parties filed cross-motions for summary judgment.

Chadwell argued that the terms of the LSA limited Antech’s 

damages to repayment of the rebates and that awarding Antech its 

lost profits would be unconscionable.2 Antech appeared to argue 

that it was entitled to recover both the rebates and its 

expected gross revenue for the remainder of the four-year term.3

 

 2 Chadwell also argued that Antech was estopped from seeking 

damages beyond the rebates and that Antech’s unjust enrichment 

claim failed as a matter of law because there was an express 

contract between the parties. The district court concluded there 

was no equitable or promissory estoppel or unjust enrichment

claim. The parties have not appealed these decisions.

3 As the district court noted, Antech’s memorandum in 

support of its motion for summary judgment was “somewhat opaque” 

as to what judgment it would have the court enter. VCA Cenvet, 

Inc. v. Chadwell Animal Hosp., LLC, 2012 WL 4005542, at *6 (D. 

Md. Sept. 10, 2012).
5

The district court rejected Chadwell’s argument that the 

default provision in Section 3.2 of the LSA limited Antech’s 

recovery to repayment of the rebates. The court held that, if 

Section 3.2 was a liquidated damages provision, it was void as a 

penalty. The court also rejected Antech’s argument that it was 

entitled to recover both the amount of the rebates and its 

expected gross revenue. The court then explained that neither 

party had “submitted the evidence or arguments necessary to 

truly test whether there is any dispute of material fact between 

them that would require resolution by a jury.” 2012 WL 4005542, 

at *7. Accordingly, the district court held the motions for 

summary judgment in abeyance and ordered further briefing on the 

issue of lost profits.

In its supplemental briefing, Antech requested an order 

awarding it damages in the amount of its lost profits, totaling 

$198,644. In response, the district court held that Antech 

failed to establish the occurrence and extent of its lost 

profits with reasonable certainty and that an award of lost 

profits would result in Antech’s unjust enrichment. The court 

further held that even if Antech had established lost profits of 

$198,644, such an award would be unconscionable. The district 

court then concluded that Antech could not recover the discounts 

it provided Chadwell under the LSA because it had provided

Chadwell the same discounts before the parties entered into the 
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contract. Finally, the court held that Antech was entitled to 

recover $16,096.66 for the rebates. Accordingly, the district 

court granted Chadwell’s motion for summary judgment, awarding 

Antech $16,096.66 in damages, and denied Antech’s cross-motion.

On appeal, Antech argues that the district court erred in 

denying its summary judgment motion and in granting summary 

judgment for Chadwell. We may review the district court’s denial 

of Antech’s motion for summary judgment because it is appealed 

along with the order granting Chadwell’s cross-motion. See Nat’l 

Coal. for Students with Disabilities Educ. & Legal Def. Fund v. 

Allen, 152 F.3d 283, 293 (4th Cir. 1998).

II

We review both the grant of Chadwell’s motion for summary 

judgment and the denial of Antech’s motion for summary judgment

de novo. See Henson v. Liggett Group, Inc., 61 F.3d 270, 274 

(4th Cir. 1995). When faced with cross-motions for summary 

judgment, we “review each motion separately on its own merits to 

determine whether either of the parties deserves judgment as a 

matter of law.” Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th 

Cir. 2003) (internal quotation marks omitted). In considering 

each individual motion, we “resolve all factual disputes and any 

competing, rational inferences in the light most favorable to 

the party opposing that motion.” Id. (internal quotation marks 

omitted). The party moving for summary judgment has the initial 
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burden of showing that no genuine issue of material fact exists 

and that it is entitled to judgment as a matter of law. Estate 

of Kimmell v. Seven Up Bottling Co. of Elkton, Inc., 993 F.2d 

410, 412 (4th Cir. 1993).

A.

We first address the district court’s denial of Antech’s 

motion for summary judgment, in which Antech sought $198,644 in

lost profits. Antech calculated these profits by subtracting its 

estimated variable costs from its expected gross revenue for the 

remainder of the four-year term. To determine its expected 

revenue, Antech calculated its revenue under the LSA for 2010, 

then applied a 4% annual increase for 2011-2013. Antech next 

applied a constant 29% variable cost rate to to its expected 

revenue for 2010-2013. Antech argues that the district court 

erred in denying its summary judgment motion because Chadwell 

failed to submit its own evidence of Antech’s lost profits and 

therefore failed to create a genuine issue of material fact. We 

disagree.

Under California law, a plaintiff in a breach of contract 

case may recover damages for lost future profits when the 

evidence makes their occurrence and extent reasonably certain.

See Grupe v. Glick, 160 P.2d 832, 840 (Cal. 1945). The award of 

lost profits means the award of net, not gross, profits. Gerwin 

v. Se. Cal. Ass’n of Seventh Day Adventists, 92 Cal. Rptr. 111, 
8

119 (Cal. Ct. App. 1971). “Net profits are the gains made from 

sales after deducting the value of the labor, materials, rents, 

and all expenses, together with the interest of the capital 

employed." Id. at 119-20 (internal quotation marks omitted). 

Although Antech factored its variable costs into its

formulation of lost profits, it failed to account for its fixed 

costs, which included “salaries & wages, contract labor, 

benefits, travel, consulting services, repairs & maintenance, 

freight & delivery, telephone, occupancy, rent, depreciation & 

amortization, and administrative costs.” J.A. 337. Antech’s 

proffered calculation of its lost profits is not sufficient to 

support the grant of Antech’s summary judgment motion because

California law confines a plaintiff’s recovery for lost profits 

to his profits after deducting all of his expenses. See Gerwin, 

92 Cal. Rptr. at 119-20. Antech did include an estimation of its 

fixed costs in the record, but because Antech failed to deduct 

all of its costs from its expected revenue when it moved for 

summary judgment, Antech has not established the occurrence and 

extent of its lost profits as a matter of law. Accordingly, we 

affirm the district court’s denial of Antech’s motion for 

summary judgment.4

 4 Although the district court denied Antech’s motion for 

summary judgment based on the insufficiency of Antech’s evidence 

of its lost profits, we are not confined to the grounds relied 

(Continued)
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B.

We next review the district court’s grant of Chadwell’s 

motion for summary judgment. Although the district court held 

that Section 3.2 of the LSA is not an enforceable liquidated 

damages provision, Chadwell argues on appeal that it was 

entitled to summary judgment because Section 3.2 is a liquidated 

damages clause that limits Antech’s recovery to return of the 

rebates. In the alternative, Chadwell argues that summary 

judgment was appropriate because awarding Antech its claimed 

lost profits would be unconscionable and because Antech cannot 

establish its claim for lost profits with reasonable certainty. 

We disagree with each of these contentions.

1.

Chadwell first argues that this court should affirm the 

district court’s grant of its motion for summary judgment 

because Section 3.2 of the LSA is a liquidated damages provision 

that limits Antech’s recovery to return of the rebates.5 The 

 

on by the district court and can affirm the district court’s 

decision on any legal basis supported by the record. Bryant v. 

Bell Atlantic Md., Inc., 288 F.3d 124, 132 (4th Cir. 2002).

5 Section 3.2 of the LSA states:

3.2 Default. If (i) Animal Hospital Owner 

breaches the exclusivity provisions set forth in 

Section 1 hereof . . . then such shall constitute an 

event of default with respect to the Rebate. At any 

(Continued)
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purpose of a liquidated damages provision is to “stipulate[] a 

pre-estimate of damages in order that the parties may know with 

reasonable certainty the extent of liability for a breach of 

their contract.” ABI, Inc. v. City of Los Angeles, 200 Cal. 

Rptr. 563, 573 (Cal. Ct. App. 1984). Under Section 3.2 of the 

LSA, Antech can recover the amount of the previously paid 

rebates upon Chadwell’s breach of the LSA’s exclusivity 

provision. This is not a liquidated damages provision because it 

provides only for a return of the rebates paid prior to the 

breach; it is not a “pre-estimate of damages” that Antech would

suffer as a result of the breach. See id. There is simply no 

reasonable relationship between the amount of rebates that 

 

time after the occurrence of an event of default, 

Antech may declare the entire amount of the Rebates 

previously paid to be billable and due immediately; 

NOTE HOWEVER, if the Animal Hospital Owner lab volume 

during any month falls below the stated rebate 

threshold in [sic], the rebate will not be apply [sic] 

to that month BUT that does not constitute default as 

long as the exclusivity provisions set forth in 

Section 1 are maintained. The remedies available to 

Antech hereunder are intended to compensate Antech for 

the rebate and discounts provided hereunder, which 

rebate and discounts would not have been provided 

unless Animal Hospital agreed to the Minimum Average 

Annual Fee requirements set forth herein, the 

requirements set forth in Section 1 regarding 

exclusivity, and the payment for Laboratory Services 

hereunder in a timely manner.

J.A. 23.
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Antech may have paid before Chadwell’s breach and the actual 

damages that Antech would suffer because of the breach. 

Accordingly, Section 3.2 of the LSA is not a liquidated damages 

provision, and it does not limit Antech’s recovery to return of 

the rebates.

2.

Chadwell next argues that the district court properly 

granted summary judgment in its favor because awarding Antech 

its lost profits would be unconscionable. The district court 

concluded that it would be unconscionable to award Antech 

$198,644 in lost profits, explaining that the practical effect 

of such an award would be to require Chadwell to pay for its 

laboratory services twice for the three years remaining on the 

LSA’s term—once to Antech for breaching the contract and once to 

the replacement laboratory. The district court also expressed 

concern that an award of lost profits would compensate Antech 

nearly $200,000 for not performing any services and that Antech 

did not detrimentally rely on the LSA because its agreement to 

provide services was not exclusive.

California law is clear that lost profits are recoverable 

as damages for breach of a contract where evidence makes their 

occurrence and extent reasonably certain, Sargon Enters., Inc. 

v. Univ. of S. Cal., 288 P.3d 1237, 1253 (Cal. 2012), and the 

damages are not unconscionable and grossly oppressive, see Cal. 
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Civil Code § 3359. A damages award is excessive “only when it is 

so grossly disproportionate to the injury suffered that the 

award appears to be the product of passion or prejudice,” SaretCook v. Gilbert, Kelly, Crowley & Jennett, 88 Cal. Rptr. 2d 732, 

746 (Cal. Ct. App. 1999). 

The lost profits claimed by Antech are reasonably certain, 

and there is no suggestion they are the product of such passion 

or prejudice. We therefore hold that the district court erred in 

concluding that an award of Antech’s lost profits would be 

unconscionable.6

3.

Finally, Chadwell argues that we should affirm the grant of 

summary judgment in its favor because Antech did not establish 

its lost profits with reasonable certainty. In considering

Chadwell’s summary judgment motion, we view all inferences in 

the light most favorable to Antech as the non-moving party, see

Hardwick ex rel. Hardwick v. Heyward, 711 F.3d 426, 433 (4th 

Cir. 2013), keeping in mind that Chadwell bore the burden of 

establishing that Antech’s recovery was limited to return of the 

 6 The district court acknowledged in its opinion that each 

of the concerns it raised with respect to awarding Antech its 

lost profits is a “natural consequence[] of allowing plaintiffs 

to seek lost profits for breaches of requirements contracts like 

this one.” VCA Cenvet, Inc. v. Chadwell Animal Hosp., LLC, 2013 

WL 2151659, at *5 n.6 (D. Md. Feb. 22, 2013).
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rebates as a matter of law, see Kimmell, 993 F.2d at 412. 

Because we find that Chadwell failed to meet this burden, we 

reverse the district court’s grant of Chadwell’s summary 

judgment motion.

Antech introduced evidence of its lost profits in the form 

of testimony from key executives, financial records detailing 

actual invoices for services performed before Chadwell breached 

the LSA, and documentation estimating Antech’s expected revenue 

and projected costs. Viewing the evidence before the district 

court in the light most favorable to Antech, the record tended 

to show the occurrence and extent of Antech’s lost profits. See

Sargon Enters., 288 P.3d at 1253. Although Antech’s calculation 

of its lost profits alone cannot support the damages award as a 

matter of law, we find that Antech has introduced evidence

sufficient to allow a proper calculation damages. Accordingly,

we reverse the grant of Chadwell’s motion for summary judgment. 

III.

For the foregoing reasons, we affirm the denial of Antech’s 

motion for summary judgment, reverse the grant of Chadwell’s 

motion for summary judgment, and remand for further proceedings 

consistent with this opinion.

AFFIRMED IN PART,

REVERSED IN PART,

AND REMANDED